September 1, 2007 by Tom Armstrong.

Article from today’s WSJ echos J. Stuart Mill, who said, “The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant.”

Notable:

The SEC wants to bar anyone who has less than $2.5 million in liquid assets, excluding real estate. The current limit: $1 million, including the value of your home.

Mitchell D. Smith, a former stockbroker who runs an investing club in San Francisco, has a message for securities regulators: Let me invest in hedge funds!

“Stay out of my wallet, stop trying to protect me from myself, stop presuming to know more than I do about my own life, risk-tolerance and financial sophistication,” Mr. Smith wrote in March.

Gregory D. Kapraun of Rochester, Minn., said the proposal gives an unfair investing advantage to pop stars like Britney Spears, or heirs to family fortunes. Why should their fat bank accounts automatically qualify them to invest in hedge funds, while he is prohibited?

Mr. Kapraun’s argument: Sports athletes with big signing bonuses, or entertainers like Ms. Spears, don’t “even come remotely close to the sophistication I have.”

Some letters take a populist view, arguing that shutting out smaller investors only makes the rich richer. “Force all the very wealthy to invest only in mutual funds and see how that flies,” wrote Arnold Peterson, an orthopedic surgeon.

Some letter-writers offered the SEC advice, suggesting that it might instead consider restricting the percentage of a portfolio that can be invested in hedge funds.

Alan Gordon, an individual investor in Huntington, N.Y., offered a laddered approach: Investors with a $1 million net worth could invest as much as 10% in hedge funds; those with $2 million can invest 15%.

“Why stop with hedge funds?” asked Kenneth A. Gruber, a professor of biological sciences at California State Polytechnic University at Pomona, Calif. He said if the SEC wants to be paternalistic it should look to protect investors from other risky investments, such as penny stocks.

“Does any sophisticated investor [or the SEC] believe that penny stocks are a safer investment than hedge funds? I submit it is easier to lose one’s shirt on penny stock investments than in hedge funds. Where will it end?”

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September 1, 2007 by Tom Armstrong.

Good post from Russell Roberts on Aug. 31, 2007 on using all measures to determine carbon footprint (post name is Eat Global).

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